Advisers

should
play by

same rules

When you go to a car lot, you
don’t necessarily expecta salesman
to put your financial interests first.

What about when you want
help rolling over your 401(k)? Or
deciding to take your pension as
an annuity or lump sum? Should
your financial adviser be held to a
higher legal standard than your car
salesman?

e=That’s the crux of the issue
before the U.S. Department of
Labor. Should an adviser helping
you decide what to do with your
Tetirement savings be required to
put your financial interests before
her own? Or can she sell you some-
thing and leave it to you to make
the best choice?

The Obama administration
wants the former. It’s pushing to
extend fiduciary duty to anyone
advising people on retirement
accounts. That includes rollovers
to IRAs, transactions that aren’t
currently governed by a fiducia-
ry-care rule,

The department also wants to
level the playing field. Thousands
of registered investment advisers
already abide by a fiduciary stan-
dard when giving advice under the
federal Investment Advisers Act.
But brokers and insurance agents

“aren't held fo this standard, even
though they might use “invest-
ment advisor” on their business
cards. They only need to offer
choices that are “suitable” for cli-
ents, and that doesn’t necessarily
mean the least expensive option,
tegulators have said.

‘This difference isn’t well under-
stood by consumers, studies sug-
gest. And it appears to cost them.

One study in Oregon compared
the returns in retirement accounts

of state university workers who
relied on brokers to pick their invest-
ments versus those who picked
their own. Broker-advised workers
See Money, C6

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Continued from C1
fared worse than do-it-your-
self investors. And they did far
worse than if they’d put their
money in a target-date fund,
researchers found.
Broker-dealers and insur-
ance companies have been
battling a proposed rule
change since 2010. A lot of
their claims suggest they’re
not acting in your best inter-.
est

Play k flier

re
Laclhtrete Ue ie

_ My take: The department
already has made a big con-
cession with this proposal. It
will allow brokers to receive
commissions while advising
On retirement assets, so long
as they enter into contracts
with clients detailing their
fiduciary duty and fees. The
Labor Department isn’t doing
what the United Kingdom and
Australia have done: banned
commissioned sales of finan-
cial products entirely,

A lot has changed since
the 1970s, when the Depart-
ment of Labor began regu-
lating retirement plans. Once
the norm, traditional pen-
sions have given way to por-
table 401(k)-type plans that
put workers in charge of their
Tetirements. Yet the law hasn’t
evolved to protect them. along
the way.

Its time to bring these rules
into the 2ist century. You can
help. The department is still
taking comments on the pro-
posal (See box). Tell ‘em you'll
haggle over a Chevy, but not
over your retirement.

°
Brent Hunsberger is
an investment adviser
representative and certified
financial planner in Portland.
For important disclosures and
information about Hunsberger,
visit ORne.ws/aboutbrent.
Reach him at 503-683-3098 or
itsonlymoneyblog@gmail.com.

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